Investing Employee Compensation in Product Development

Companies are looking for solutions to increase employee loyalty, eliminate layoffs and determine clever funding for product development in the absence of outside investment opportunities. When clients face these challenges, we often discuss ways to increase employee ownership in the business. During work hours, employees find it difficult to focus as their thoughts wander between obligations to their employer and their economic situation at home.  A profitable fix is to increase the line of sight between these two dichotomies and tie a reward to the result.

During the last recession, one company I’ve worked with (who opted to remain anonymous) partnered with their engineering and manufacturing staff to push a new product to market. The product was midway through development and was a derivative of a model already being sold. They knew the product would work; they just didn’t have the cash to complete development and get it to market before their competitor. To solve this dilemma, they created a voluntary program whereby top talent engineering and manufacturing staff could contribute 2-10% of their base compensation for six months to one year and enjoy a 300% return on that investment if the product successfully went to market with X systems sold and no installation problems or customer complaints in the months following. The program was very successful. The invested compensation closed the gap on funds needed to finish development; no layoffs were needed to free up cash; employees felt greater business ownership and were happy to work longer hours to insure their investment paid off. The teamwork and company loyalty effects that occurred during that time created long lasting results.

Rewards do not have to be monetary. Enjoyment of the work is always at the top of every reported satisfaction survey. Giving a staff member more project responsibility, more decision-making power, true involvement in the business may be all that’s needed to increase the bottom line. However, as employees are watching 401(k) accounts decrease; are hearing about the threat of possible inflation; and possibly thinking that the grass may be greener somewhere else, it may behoove employers to tie monetary rewards to positive line of sight outcomes. Cash strapped companies may see this as a tremendous hurdle, but hopefully the example I’ve outlined provides food for thought. We all need to get creative and use the resources we currently have to our advantage. What are you doing with your resources to increase the line of sight for bottom line gain?

"My professional passion stems from a fascination with how the individual needs of employees, managers, and the business converge to produce an outcome. I’m driven by a desire to help leaders and employees find the balance between competing needs so they can work together to address the challenges they face."